Category: Blog

Contract management procedures cross departmental boundaries and affect almost every aspect of operations. An automated management system helps streamline these processes and allows each department to create, retrieve, and monitor contract data more efficiently. While the benefits of an effective contract management solution impact all departments in an organization, there are six that can profit from its tools the most.

1. Sales Department

Integrated contract management solutions help sales teams create consistent legal agreements for products and/or services every time someone places a new order. Employees can use audit and revision tracking tools to alert team members whenever a user updates an item, generates a copy or downloads a new contract. Centralized systems allow employees to search for specific versions of the same contract and ensure that all active agreements are up-to-date.

With numerous tools available at the click of a button, sales teams using an automated contract management system can benefit from ​these advantages:

1. Increased Revenue – Clearer oversight and alert systems help reduce revenue leakage from missed renewals.
2. Easy Reporting – Contract status updates help team members generate accurate sales forecasts and meet compliance milestones
3. Reduced Errors – Automated contract creation helps reduce the number of manual errors when drafting new agreements.

2. Marketing Department

When using an automated system, marketing departments can ensure they use the same branding and content in all product contracts. Employees can input business terms, product descriptions, and pricing into templates and easily amend them. Updated templates automatically become available to the entire organization, eliminating the risk of using out-of-date marketing materials.

Marketing teams can use centralized databases to monitor and analyze specific product lines, special offers, and promotions. They can then use this data to forecast trends and maximize the success of a lucrative advertising campaign.

3. Procurement Department

Procurement teams can pull purchase data, such as volumes and prices, service level agreements (SLAs), terminations, and extensions from centralized contract management systems. Overseeing and renewing buy-side contracts is simple with access to scheduled alerts and company-wide databases. ​SLA milestones can be automatically reported, reducing the risk of lapsed contracts.

4. Fulfillment Department

Automated events, triggered alerts, and customized notifications help fulfillment teams improve workflow and meet delivery deadlines. Using modern contract management solutions, fulfillment teams can set alerts for when contracts are updated and require review. Without access to a centralized system or the ability to pull current contract data, fulfillment teams may be slow to execute deliveries or confirm that the terms have been satisfied.

5. Legal Department

The policies that underpin contractual agreements must be monitored and upheld. A comprehensive contract management solution helps streamline this process by granting legal personnel access to historical data, such as when an agreement was signed, who updated it, and when a renewal is required. ​Legal teams can access and update contract templates, ensuring that all terms and conditions are current, inputted correctly, and in the right format.

6. Finance Department

Using an integrated, centralized database, finance teams can avoid inputting the same information into multiple programs. Reporting on the status of a contract is easy, allowing team members to generate accurate revenue forecasts and reports. Using a streamlined contract management system has ​these advantages:

• Increased security by maintaining accurate terms and conditions across all departments
• Increased accuracy between reported revenue and contracted revenue through alerts and automation
• Improved productivity by reducing service and delivery times through automation

Centralized programs help all departments manage contractual agreements with greater accuracy while protecting against unnecessary errors caused by messy manual systems.

Enterprise resource planning (ERP) programs, customer relationship management (CRM) tools, and Salesforce automation (SFA) systems can streamline processes and improve efficiency. These programs allow organizations to communicate across various departments, access centralized databases, and collaborate on tasks. Each department has immediate access to the most relevant, up-to-date information, allowing employees to improve workflows and reduce risk.

Automated contract management systems produce similar benefits. Creating, updating and monitoring contracts across multiple departments can help mitigate errors and improve workflows. However, these systems must be compatible with existing ERP and CRM programs to be truly beneficial.

Do ERP systems cover contract management?

ERP systems are centralized networks used to improve a company’s day-to-day operations. However, while ​ERP models are used to streamline a variety of tasks, research shows they do not ​address the needs of contract management. A study conducted by Goldman Sachs found that “ERP vendors cover 20% – 30% of the needs of most enterprises.” As a result, “50% – 60% of companies have funded extensions of their ERP systems, and most others have relied on offline spreadsheets, standalone databases, or homegrown solutions.” These findings imply that ​ERP models do not meet the agility needed to run contract management systems, leaving companies to adopt outdated methods.

2 Issues Facing Businesses with Existing ERP Systems

ERP systems that only cover 20% – 30% of a business’s contract management processes may fail to prevent costly errors, such as lapsed renewals, lost documents, and inconsistent legal terms. The solution is to improve and upgrade ​ERP systems to meet these needs. However, there are two hurdles facing businesses with existing ERP programs in place:

1. Loss of Investment – Board members may not be eager to introduce new programs that undermine or eradicate their original ERP investment. ​They may opt to use existing ERP programs and forgo the sophisticated tools needed to streamline contract management tasks.
2. Incompatibility – Adding a contract management solution that is not compatible with an existing ERP system can lead to a fragmented workflow and decreased efficiency. Asking employees to access multiple platforms that do not communicate across departments can lead to duplicate data entries and inconsistencies.

Therefore, satisfying the agile operations of contract management without diminishing existing ERP investments requires organizations to turn to robust, integrated programs that offer open architecture and access to legacy applications.

Benefits of Integrated ERP, CRM, and Contract Management Systems

By integrating a contract management system with an existing ERP or CRM program, organizations can utilize the positive aspects of their legacy networks while streamlining contract management tasks. If integrated, a smart contract management ERP system can produce these results:

1. Streamlined communication paths between departments
2. Increased efficiency in document retrieval and monitoring
3. Reduced risk of irregularities and subsequent compliance errors
4. Easy transitions for employees and less administrative training
5. Opportunity for strategic contract creation by utilizing existing databases

Companies have long benefited from programs that simplify procedures and work across all departments. Integrating compatible contract management solutions into your day-to-day operations can improve productivity, reduce risk, and lower costs.